ML-Implode News - China Continues to Battle Massive Capital Flight Problem

Any way you do the math, capital outflows from China continue to be massive. A large current account surplus continues to cushion a potential fall in reserves, but more seems to be happening for reserves to be stable. Looking deeper into the nature of outflows, one has to conclude that the situation remains fragile. It is still residents driving the outflows and they do not seem to be a "good cholesterol" type (i.e. repayment of debt or purchases of assets abroad).
Meanwhile, China hasn't fully resolved its balance-of-payments problem. The reserves are massive, but so are the "bad cholesterol" outflows. It is time to go to the doctor and increase the return on assets for capital to be willing to come back. Unfortunately, the Chinese authorities seem to be heading in the opposite direction, with increasingly lower interest rates and a lack of real reform for state-owned enterprises.

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China Continues to Battle Massive Capital Flight Problem